Leibniz Universität Hannover - Economics and Business Administration Area; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Vienna University of Economics and Business Administration

Date Written: June 12, 2014

Abstract

When based on perceived rather than on objective income distributions, the Meltzer-Richards hypothesis and the POUM hypothesis work quite well empirically: there exists a positive link between perceived inequality or perceived upward mobility and the extent of redistribution in democratic regimes – though such a link does not exist when objective measures of inequality and social mobility are used. These observations highlight that political preferences and choices might depend more on perceptions than on factual data.

Engelhardt, Carina and Wagener, Andreas, Biased Perceptions of Income Inequality and Redistribution (June 12, 2014). CESifo Working Paper Series No. 4838. Available at SSRN: https://ssrn.com/abstract=2463129

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